PARIS -- Renault has offered labor unions a new contract that will allow its employees in France to collect full pay during temporary production shutdowns.
The French carmaker estimates it will have to reduce production by 20 percent this year as new-car sales slump during the global economic slowdown.
Renault cannot cut jobs in France after accepting up to 4 billion euros in government aid earlier this month. French President Nicolas Sarkozy made employment protection a key condition of multi-billion euro loans offered to Renault and domestic rival PSA-Peugeot-Citroen.
Renault has used temporary manufacturing shutdowns to reduce its new-car stocks since mid-2008, when sales began slipping in its key global markets.
Last year, the company’s unit sales were down 4.1 percent to 2.38 million, while revenues were down 7 percent to 37.8 billion euros.
Renault's 2008 operating income slipped to just 212 million euros, or 0.6 percent of revenues, well below the 3.3 percent reported in 2007.
CEO Carlos Ghosn and Chief Operating Officer Patrick Pelata have both said that production cuts and temporary shutdowns will be a key part of efforts to better control inventory and limit cash burn during 2009.
Until now, Renault's temporary shutdowns have only impacted manufacturing employees. Factory workers who were told to stay at home generally received 60 percent of their net salary from the government-run unemployment insurance system and Renault has traditionally added an additional 10 percent.
As part of its reaction to the global slowdown, the French government recently decided to boost the temporary unemployment indemnity to 75 percent of net pay.
Renault has offered to make up the remainder of net salary for all employees
For manufacturing workers, the difference will be paid from a new Renault-run crisis management fund, which will bring together "solidarity payments" deducted from all employee salaries.
Manufacturing workers will also have the opportunity to sell compensatory time back to the company, on a voluntary basis.
White-collar workers including engineers and managers will also be able to maintain their full salary during forced shutdowns by trading in compensatory time. The new contract calls for a trade of one complimentory day for every four days of temporary shutdown.
Renault will discuss the plan with labor unions March 10.